CONTRIBUTION AND INDEMNIFICATION AGREEMENT
CONTRIBUTION AND INDEMNIFICATION AGREEMENT, dated as of June 30, 2005
(the "Agreement"), by and between Xxxxxx Xxxxxxx Promotions, Inc., a Delaware
corporation ("CKP") and World Wide South Beach, LLC ("WWSB"). Each of CKP and
WWSB is hereinafter sometimes referred to as a "Guarantor" and together as the
"Guarantors".
BACKGROUND
WHEREAS, CKP is a party to that certain Guaranty and Pledge Agreement,
dated as of June 30, 2004, as amended as of the date hereof (the "CKP
Guaranty"), in favor of Redwood Holdings Limited, Platinum Partners Value
Arbitrage Fund, L.P., and WEC Partners LLC (collectively, the "Investors")
pursuant to which, among other things, CKP provided a guaranty of payment to the
Investors of the capital contribution amount of $1,000,000 (the "Capital
Contribution Amount") to, among other things, provide initial financing under
that certain Limitied Liability Company Agreement (the "LLC Agreement"), dated
as of June 30, 2004, of Pledge This Holdings, LLC, a Delaware limited liability
company (the "Company").
WHEREAS, WWSB is a party to that certain Guaranty Agreement, dated as
of June 30, 2005 (the "WWSB Guaranty" and, together with the CKP Guaranty, the
"Guarantees"), in favor of the Investors pursuant to which, among other things,
WWSB provided a guaranty of payment to the Investors of the Capital Contribution
Amount.
The Guarantors desire to make arrangements by and between themselves
to allocate the liability of the Guarantors under the Guarantees.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound, the parties agree as follows:
1. Contribution and Indemnification. (a) The Guarantors acknowledge and
agree that it is their intention that, if payment of any Capital Contribution
Amount is required to be made pursuant to the Guarantees, the aggregate amount
of such payments (the "Total Liability Amount") shall be shared by, and
allocated between each of CKP and WWSB in accordance with the percentages set
forth opposite their respective names as set forth on Schedule A attached hereto
and made a part hereof (such percentage hereinafter referred to as the
"Designated Percentage" of such Guarantor). Accordingly, each Guarantor
severally agrees (subject to the provisions of Section 3 hereof) that, if any
required payment of the Total Liability Amount (the "Required Payment Amount")
is made by, or demanded of, a Guarantor (the "Claiming Guarantor") under the
Guarantees, the other Guarantor shall immediately indemnify the Claiming
Guarantor and pay the Claiming Guarantor (if and only if the Claiming Guarantor
has made a payment under the Guaranty), or by directly paying the Investors or
any other third party designated by the Claiming Guarantor (if a payment has
been demanded of the Claiming Guarantor, but the Claiming Guarantor has not made
such payment), an amount equal to the product obtained by multiplying the
Required Payment Amount by the Designated Percentage of such other Guarantor. In
the event that both Guarantors are required to make payments of any Required
Payment Amount pursuant to the Guaranty, the Guarantors shall, in good faith,
make such adjustments in the amounts that each is required to pay (whether
directly pursuant to the Guaranty or pursuant to the provisions of this
Agreement), so that each such Guarantor shall be required to pay no more than
his or her Designated Percentage of the aggregate Required Payment Amount.
(b) When a Claiming Guarantor receives a demand for payment, or makes a
payment, under the Guaranty, as applicable, such Claiming Guarantor shall notify
the other Guarantor, which notice (the "Notice") shall constitute a demand for
payment from such other Guarantor pursuant to this Section 1 and shall contain a
copy of any payment notice received by such Claiming Guarantor and evidence of
any payment made.
(c) Any Guarantor making a payment pursuant to this Section 1 shall be
subrogated to the rights of the Claiming Guarantor, or such other third party to
whom such payment is made to the extent of such payment.
(d) In the event that one or both of the Guarantors becomes a party to
any action or proceeding in which claims are asserted against such Guarantor(s)
seeking to require the Guarantor(s) to pay amounts pursuant to the Guaranty, the
other Guarantor (if applicable) agrees that, if the Guarantor(s) brings a third
party action against any one or more of the other Guarantor in such action or
proceeding (in which the basis of the claim of the third party plaintiff
Guarantor is that the other Guarantor (if applicable) are liable, up to their
respective Designated Percentages, for the claim being asserted against the
third party plaintiff Guarantor), the other Guarantor (if applicable): (i) shall
submit to the jurisdiction of the court in which such action or proceeding is
pending; and (ii) unconditionally waives and agrees not to assert by way of
motion, as a defense or otherwise any claims that he or she is not subject to
the jurisdiction of such court, that such action is brought in an inconvenient
forum or that the venue of such action or proceeding is improper. Each Guarantor
irrevocably waives trial by jury in connection with any such third party action
or proceeding.
(e) Notwithstanding anything to the contrary herein, or in any other
agreements executed concurrently herewith, any and all payments owed to the
Investors ("Installment Payments") pursuant to that certain Installment Payment
Agreement (the "Installment Payment Agreement"), dated as of June 30, 2004, as
amended as of the date hereof, are the sole responsibility of CKP and are
outside the purview and scope of this Agreement. CKP acknowledges and agrees
that WWSB shall have no contribution or indemnification obligations with respect
to any Installment Payments, and shall not be liable for such payments. CKP
agrees that, if any Installment Payment is made by, or demanded of, WWSB, CKP
shall immediately indemnify WWSB and pay WWSB (if and only if WWSB has made a
payment), or by directly paying the Investors or any other third party
designated by WWSB (if a payment has been demanded of WWSB, but WWSB has not
made such payment), the amount of such payment, plus any fees, costs and
disbursements incurred by WWSB in connection with the enforcement of this
Section 1(e).
2. Subrogation. In addition to all such rights of indemnification and
subrogation that the Guarantors may have under the Guarantees or applicable law
(but subject to Section 3 hereof and to the provisions of the Guarantees), in
the event a payment shall be made by any Guarantor under the Guarantees, such
Guarantor shall be subrogated to the rights of the Investors to the extent of
such payment in all respects and shall be entitled to the same priority on
allocations and distributions of Cash Flow (as defined in the LLC Agreement)
with respect to the Capital Contribution Amount as set forth under the LLC
Agreement. If both Guarantors make a payment of the Capital Contribution Amount
under the Guarantees, both Guarantors shall be subrogated to the rights of the
Investors on a pro rata basis in accordance with their Designated Percentages.
Solely for purposes of illustration, if WWSB pays the Capital Contribution
Amount of $1,000,000 to the Investors under the WWSB Guaranty, and CKP pays WWSB
its required Designated Percentage of $200,000, each of WWSB and CKP shall be
subrogated to the rights of the Investors on a pro rata basis, or $800,000 for
WWSB and $200,000 for CKP.
3. Subordination. (a) Notwithstanding any provision of this Agreement to
the contrary, the obligations of the Guarantors pursuant to this Agreement (the
"Agreement Obligation") are subordinate and junior in right of payment to the
Guarantor's obligations in the manner and to the extent set forth in the
Guarantees (the "Obligations"). No failure on the part of any Guarantor to make
the payment required by Sections 1 or 2 (or any other payments required under
applicable law or otherwise) shall in any respect limit the Obligations of any
Guarantor, and each Guarantor shall remain liable for the full amount of its
Obligations under the Guarantees or, solely with respect to CKP, the Installment
Payment Agreement.
(b) Notwithstanding any provision of this Agreement to the contrary, the
right of CKP to allocations and distributions of Cash Flow (as defined in the
LLC Agreement) with respect to the Capital Contribution Amount shall be junior
and subordinate in all respects to the right to payment of WWSB. Solely for
purposes of illustration, if WWSB pays the Capital Contribution Amount of
$800,000 to the Investors under the WWSB Guaranty, and CKP pays the Capital
Contribution Amount of $200,000 to the Investors, CKP shall be junior and
subordinate to the rights to payment of WWSB.
4. Indemnification; Attorney's Fees: CKP agrees to indemnify, defend and
hold harmless WWSB against any and all claims resulting from a breach of any of
CKP's obligations hereunder, including without limitation, the obligations set
forth in paragraph 1(e), including all reasonable attorney's fees and costs in
connection therewith. WWSB agrees to indemnify, defend and hold harmless CKP
against any and all claims resulting from a breach of any of WWSB's obligations
hereunder, including all reasonable attorney's fees and costs in connection
therewith. In the event of a dispute between the parties hereunder, the
prevailing party shall be entitled to reimbursement of outside attorneys fees
and costs.
5. Termination. This Agreement shall survive and be in full force and
effect so long as any Obligations or any Agreement Obligation hereunder is
outstanding and has not been indefeasibly paid in full, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or any
part thereof, of any Obligations or Agreement Obligation is rescinded or must
otherwise be restored by any Guarantor upon the bankruptcy or reorganization of
any Guarantor, or otherwise.
6. Relationship of Parties. Nothing contained herein shall be deemed to
constitute a partnership between, or a joint venture by, or an agency or other
relationship between or among the parties. This Agreement is between two
independent contracting parties.
7. Notices. All notices and other communications hereunder shall be in
writing, and shall be delivered in person, or by first class certified mail
return receipt requested (with all postage prepaid), or by facsimile
transmission duly addressed to the parties at their respective addresses or
facsimile numbers, as applicable, set forth as follows:
If to CKP:
1414 Avenue of the Americas
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xx. Xxx XxXxxxxxx
Fax No.: (000) 000-0000
If to WWSB:
x/x Xxxxx Xxxxx, Xxx.
Xxxxxx & Associates
0000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax No.: (000) 000-0000
Any party may specify a different address (or facsimile number) for such purpose
by a notice of change of address (or facsimile number) given to the other party
in the manner specified by this Section 6. Any notice or other communication
hereunder shall be effective on the day delivered in person, or on the day
received, if sent by mail (as aforesaid), or on the day sent, if sent by
facsimile transmission prior to 5:00 p.m. (New York time) on a business day and
if a written confirmation of receipt is obtained; provided that a copy of the
facsimile transmission is also mailed to the intended recipient.
8. Remedies Cumulative; Invalidity. All remedies, rights, undertakings,
obligations and agreements contained in this Agreement shall be cumulative, and
none of them shall be in limitation of any other remedy, right, undertaking,
obligation or agreement available to any of the parties hereto, whether at law,
in equity or otherwise. The provisions of this Agreement are in addition to and
not in limitation of any rights of subrogation, contribution or indemnity that
any Guarantor may have pursuant to applicable law. The invalidity, illegality or
unenforceability of any term or provision contained in this Agreement (as
determined by a court of competent jurisdiction) shall in no way affect the
validity, legality or enforceability of any other term or provision hereof. It
is the intent of the parties that this Agreement be enforced to the fullest
extent permitted by applicable law.
9. Headings, etc. The section headings contained in this Agreement are
inserted herein for the purpose of convenience and reference only and are not to
be given any substantive effect and shall not be used or have any affect on the
construction or interpretation of any term or provision hereof.
10. Amendment; Waiver. Any amendment, modification or waiver of any term or
provision of this Agreement shall only be effective if such amendment,
modification or waiver is evidenced by an instrument in writing duly executed by
each of the parties hereto. No waiver by a party of any breach of any provision
of this Agreement shall be deemed to be a waiver of any preceding or subsequent
breach of the same or similar nature or of any other provision of this
Agreement.
11. GOVERNING LAW; JURISDICTION. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED THEREIN, WITHOUT REGARD OR REFERENCE TO ITS
CHOICE OF LAWS OR CONFLICTS OF LAWS PRINCIPLES. THIS AGREEMENT SHALL NOT BE
CONSTRUED OR INTERPRETED AGAINST THE PARTY CAUSING THIS AGREEMENT TO BE DRAFTED.
THE PARTIES HEREBY UNCONDITIONALLY AND IRREVOCABLY CONSENT TO THE EXCLUSIVE
PERSONAL AND SUBJECT MATTER JURISDICTION OF THE FEDERAL DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF THE COURTS OF THE STATE OF NEW YORK LOCATED
IN THE COUNTY OF NEW YORK IN RESPECT OF ANY CLAIM, ACTION, SUIT OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT. IN CONNECTION WITH ANY SUCH CLAIM,
ACTION, SUIT OR PROCEEDING, THE PARTIES UNCONDITIONALLY AND IRREVOCABLY WAIVE
ANY RIGHT (A) TO CONTEST THE VENUE OF SUCH COURTS; (B) TO ASSERT THAT SUCH
COURTS IN ANY WAY CONSTITUTE AN INCONVENIENT FORUM; (C) TO REQUEST OR HAVE A
JURY TRIAL; AND (D) TO ASSERT THAT SUCH PARTY IS ENTITLED TO ANY IMMUNITY FROM
LEGAL PROCESS, JUDGMENT OR EXECUTION OF JUDGMENT. THE PREVAILING PARTY IN ANY
CLAIM, ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
SHALL BE ENTITLED TO COLLECT ITS COSTS AND EXPENSES IN CONNECTION WITH SUCH
CLAIM, ACTION, SUIT OR PROCEEDING (INCLUDING, WITHOUT LIMITATION, THE REASONABLE
FEES AND EXPENSES OF ATTORNEYS AND OTHER EXPERTS AND COURT COSTS).
12. Assignment, etc. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties and their successors (whether by merger or
otherwise), permitted assigns, heirs, estate and personal representatives.
Except as otherwise provided herein, this Agreement may not be assigned by any
party hereto nor may any party's duties or obligations hereunder be delegated,
without the prior written consent of the other party.
13. Complete Agreement. This Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter hereof, and it
supersedes and all other prior agreements and understandings, if any, whether
oral or written, with respect to such subject mater, all of which are merged
herein and therein. There are no representations, warranties, agreements or
promises between the parties with respect to such subject matter, except those
which are expressly set forth herein.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, and all of which, when taken
together, shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
date first above written.
XXXXXX XXXXXXX PROMOTIONS, INC.
By: /s/ Xxx XxXxxxxxx
Xxx XxXxxxxxx
Executive Vice President
WORLD WIDE SOUTH BEACH, LLC
By:
--------------------------
Schedule A
Designated
Guarantor Percentage
World Wide South Beach, LLC 80%
Xxxxxx Xxxxxxx Promotions, Inc. 20%
---
100%
